Flash Briefing: Trillian’s R600m state capture hit; Ramaphosa to rescue Eskom; Old Mutual fires Moyo; PIC Naspers jitters

By Jackie Cameron

In today’s Biznews Flash Briefing:

  • The Old Mutual share price jumped on news that its board has decided to fire its CEO Peter Moyo. The insurer suspended Moyo last month to investigate what it said was a conflict of interest involving Old Mutual and a company owned by Moyo, NMT. It is questioning dividend payments of about R31m to NMT. But, as Bloomberg reports, no clear explanation was given on why the payments were declared outside of the insurer’s policies. “The board came to the conclusion that there was a material breakdown in trust and confidence,” it said. Moyo is set to challenge the decision with legal action. 56-year-old Peter Moyo, who trained as a chartered accountant at KPMG in Zimbabwe, joined Old Mutual in 1997 before becoming head of Alexander Forbes Group Holdings Ltd. in 2005, reports Bloomberg. Moyo, says the news agency, quit two years later after clashing with the board. In 2016, while chairman at Vodacom Group Ltd., Moyo tried to buy a stake in the mobile phone company through NMT, before the deal was scuppered. You can read more on developments involving Peter Moyo and Old Mutual story on Biznews.
  • The Naspers share price moved up about 2% on Tuesday. The Public Investment Corporation is encouraging its fund managers at the Government Employees Pension Fund to reduce its Naspers shareholding of about 16%. Bloomberg reports that the fund’s investment team is concerned that Naspers’ success is linked to the Chinese government. Naspers’s value has grown 72-fold since 2004 on the back of the success of an early-stage investment in Chinese games developer Tencent Holdings, which listed in Hong Kong that year. Tahir Maepa, who represents the 240,000-strong Public Servants Association, told Bloomberg of the Naspers stake:“It’s a huge risk, not only for the PIC, it’s a risk for the South African economy and the JSE.” Naspers accounts for almost 25% of a shareholder-weighted index on the Johannesburg Stock Exchange, continues Bloomberg. While that will be reduced when the company spins off its Tencent stake and other internet-focused assets into a new vehicle listed in Amsterdam next month, its 73% holding in that entity, known as NewCo, will only cut its weighting in Johannesburg by about a quarter, according to Naspers. Furthermore, Naspers and NewCo are both reliant on the Tencent investment, which is worth more than the company as a whole.
  • There has been an exciting breakthrough in the fight against corruption and state capture. Trillian Capital Partners has been ordered to pay back Eskom almost R600m by the High Court in Pretoria. The ruling was handed down on Tuesday, Fin24 reports. Eskom has not yet commented. According to Fin24, the court ruled on Tuesday that payments from the state-owned power utility to Trillian were “unlawful and invalid”. Trillian has been at the centre of the state capture scandal. Its boss, Eric Wood, who calls himself South Africa’s greatest financial markets trader, is a former business partner of Gupta right-hand man Salim Essa, with Essa’s Trillian Holdings selling to wood in 2017. Wood’s name has appeared on a list of global money launderers handed in to political leaders and the authorities in the UK and Europe. Wood is also believed to have benefited from currency trades on inside information in December 2015 that former president Jacob Zuma was about to axe the finance minister at the time, Nhlanhla Nene – a decision that sent the rand into freefall.
  • President Cyril Ramaphosa will announce more measures to support cash-strapped power utility Eskom, his office said on Tuesday. “It is expected that the President will announce further measures to support Eskom’s efforts at recovery and financial and operational sustainability,” the presidency reportedly said in a statement, following a meeting between Ramaphosa and Eskom’s board. The presidency did not say when the measures would be announced, but Ramaphosa is scheduled to make his State of the Nation address on Thursday.
  • All this good news around Eskom is believed to have been behind a boost to the value of the rand in trade on Tuesday. Also helping the rand gain value against the British pound was negative sentiment towards Boris Johnson, the Tory party member in the lead to become the next British Prime Minister. Johnson won 40% of the votes in the second round of voting in the Tory leadership contest, The Guardian reports. Late on Tuesday, R18.22 would buy you one British pound, R14.52 would get you one US dollar and R16.26 could be exchanged for one Euro.